Busa welcomes union proposals on Eskom

Busa’s vice president describes the proposal as a ‘constructive approach’.
Cosatu’s plan, which was presented to the government on Monday, would leave Eskom with R200bn of debt, an amount the utility has previously said it could manage. Image: Waldo Swiegers, Bloomberg

South Africa’s main business-lobby group welcomed proposals by the nation’s biggest labour-union federation to rescue debt-stricken power utility Eskom.

The Congress of South African Trade Unions on Monday presented its plan to the so-called President’s Working Council, which includes government, business and labour leaders. The labour federation has suggested that state-owned institutions take over R254 billion of Eskom’s debt.

Read: Cosatu to present R254bn Eskom rescue plan

“We welcome the constructive approach,” Martin Kingston, vice president of Business Unity South Africa, said by phone Monday. He said that the business community is in alignment with Cosatu on many of Eskom’s problems that the labour federation identified.

Cosatu’s plan would leave Eskom, which provides 95% of South Africa’s electricity, with R200 billion of debt, an amount the utility has previously said it could manage. Eskom is failing to cover its running costs and inadequate maintenance is leading to frequent plant breakdowns and rolling power outages. Those are stalling economic growth.

Cosatu garnered support for its proposals from the rival Federation of Unions of South Africa and National Clothing and Textile and Allied Workers Union, along with community groups, said Matthew Parks, Cosatu’s parliamentary co-coordinator. He described Monday’s meeting as “very positive,” with participants agreeing to hold a second meeting under the auspices of the National Economic Development & Labour Council on February 5.

“Everyone recognised the extent of the crisis we are in and agreed it’s time for action,” Parks said by mobile-phone text message. There is “lots of hard work ahead, but this could be a major turning point.”

Participants at Monday’s meeting agreed that Eskom must reduce its debt, though proposals on how the loans are serviced must be feasible, Kingston said. With banks and other financiers becoming increasingly reluctant to fund the utility, there is a willingness to consider development-finance institutions and other bodies like the state pension fund manager, the Public Investment Corp., as sources of finance, he said.

“The pool of capital is shrinking rapidly,” Kingston, who is executive chairman of Rothschild & Co.’s South African unit, said. Any lending should not breach the mandates or affect the fiduciaries of the organizations involved, he added.

“Within those constraints, we are more than happy, very happy and keen to work with Cosatu and other social partners” to resolve Eskom’s debt problems, Kingston said.

© 2020 Bloomberg L.P.

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Have anyone asked the pension fund members about this? A vote among the members even?

The beauty of it is this – those who supported the ANC are now going to foot the bill. They will pay for their mistakes. What goes around comes around….and all that stuff. Devine justice some might say. The pity is that we are all paying for the mistakes that are made by ANC supporters.

Of course they’ll like it, because it’s stupid.

Cosatu being too clever! Most Government pension funds are defined benefit so this is no risk at all to their retirees. When Eskom looses their money the tax payer will just top up the pensions! Once again taxpayers to the rescue! If private pension funds are tapped which are mainly defined contribution the risk will sit with the retirees.

You are correct interms of guaranteed pension, however only if there is sufficient tax payers left, after this idiotic proposed implementation.

Yeah its easy to make such a stupid proposal when you know Tax payers will be on the hook when it all fails as it surely would.
How does Cosatu propose to pay the interest on the debt once its taken it over? If someone takes over the debt the interest on those bonds must still be paid

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